The Long-term Effects of Your Short-term Loan

When the financial status in the United States started to turn for the worse, three million sensible Americans went out to get a payday loan, and now because of that they cannot avail mortgage loans.

The status of the economy has gotten harder for the citizens that they would look for any way to get their hands on a loan when they need it. Mortgage loans are the most sought for by the masses, however the lenders are starting to become tight fisted when it comes to loaning to people who had availed payday loans, even if they had settled the accounts.

If you are planning to buy land or own any establishment, it just means you have to think it through before you get a loan. Though short-term loans or payday loans as many would call them are commonly availed by many, banks still refuse to approve loans from those who engage in the business.

Payday loan stores have been supplying their data to banks since the start of the year. The financial institutions will then refuse to give mortgages to the people whose names appear in the list. Employees are just expected to reject a customer even if he or she has good credentials.

According to Marc Gander, the founder of the Consumer Action Group; consumers are being kept in the dark by the institutions because they are not informed that getting a payday loan would ruin their hopes in purchasing a house.

Meanwhile, according to Keith Osborne, it is important to think really well if you need a mortgage loan in the future before you decide on taking on a payday loan for this will make you most unlikely to get one.

The spokesman of Consumer Finance Association, Mr. Richard Griffiths says that it is a unwise decision to base a costumer’s ability to handle a mortgage loan through his decision to apply for a payday loan.

Rates on Mortgage Loans Decline Again

The interest rates on US fixed mortgage loans decreased once again to its lowest ever. As a result, potential buyers have more motivation to face the housing market.

According to Freddie Mac, a mortgage buyer, the average interest rate on the 30-year mortgage loan declined to 3.56 percent, which is down from 3.62 percent in the previous week and the lowest ever since the 1950s, when long-term mortgages started.

Moreover, the average interest rate on the 15-year mortgage decreased to 2.86 percent, which was down from 2.89 percent in the previous week.

One of the reasons for the moderate housing recovery this 2012 is the inexpensive mortgages. In fact, home sales increased for the month May compared to the same period in the previous year.

The low interest rates for mortgages could offer assistance to the economy as well, if a larger number of people refinance. People who refinance at lower rates will be charged with a lower interest on their loans, thereby having more money to consume and save. A lot of homeowners allocate their savings on renovation, furniture, appliances and other developments, which causes the economy to grow further.

However, the rate of home sales is still under strong levels because there are still a lot of people who find it hard to be eligible for a mortgage loan or do not have enough money to pay a large amount for deposit as demanded by banks.

In addition, the weak job market could also discourage some people from buying homes. According to a report from the government in the previous week, only 80,000 jobs were added by US employers during the month of June, causing the unemployment rate of 8.2 percent to remain the same. This slow job creation leads to less spending of consumers.

There has been a decline in the mortgage rates since they tend to trace the yield on the 10-year Treasury note. Because of the weaker US economy and uncertainty concerning how the Europe debt crisis can be solved, investors buy Treasury securities, which are deemed as harmless investments. When there is a greater demand for Treasury securities, there is a corresponding decrease in the yield.

Why is it Hard to Refinance a Mortgage?

Years ago, when the loaning business was not in the crisis it is in today, one thing is always for certain. When the interest rates would drop, the homeowners would refinance their mortgages to be able to take advantage of the lower rates. This would help them save about a hundred bucks in their monthly bills.

However, things do not work that simple anymore. Mortgages rates have been at their lowest now. The average mortgage loan is a 30 year loan at 3.56% rate this is almost 1 percent lower than it used to be last year.As the rates have decreased, the number of refinancing applicants has also fallen for the third time this week.

According to CNBC, the unusual trend is not new, and it may mirror the new reality of housing in the coming years. But there is definitely something you should worry about further about a mortgage than just its rate. If the value of a property has fallen, then it can lead to being declined for a refinanced loan. The government has stretched out the authority of Fannie Mae and Fannie Mac so that they could refinance loans in the Home Affordable Refinance Program. This will allow them to make refinancing transactions to happen by getting rid of constraints on the unequal position of the current market.

Banks are still being cautious with their transactions in mortgages. The Bank of America, JPMorgan Chase, Citigroup and the Wells Fargo are currently revolving around the $25 billion settlement money they have with the state authorities and federal officials. They are trying to avoid being stuck on the same situation in the foreclosure-abuse they had last year. The most civil thing to do is for them to demand higher loans.

So, if you have the opportunity to refinance your loan, do not hesitate to take the opportunity to talk to your lender about it. For it may be able to help you in reducing your liabilities in the mortgage loan in the future.

Subprime Lending Gets New High

Subprime lending is recovering again in the United States. Although there is still a limited number of subprime mortgages available in the market, because of the large amount of loans that still remain unpaid by home buyers.

Lending to people with less than stellar credit has increased for both auto loans and credit cards, banks are anticipating the number of loans to rise up to $600 billion for car loan purchases in the near future. Lenders are being less tight with car loans because it is surprisingly a profitable business today.

Only 25 percent of lenders think that subprime lending will continue to be profitable in the next few months. Half of them see that this increase will come from automobile loans; this is according to the latest survey released this week.

Andrew Jennings, the chief analytics officer of Minneapolis Fair Isaac Corp., believes that it is a significant figure to take note of. It just means that the lenders in the industry are currently starting to loosen up, although it does not necessarily mean that the number of subprime loans will increase rapidly.

Experian says that 44 percent of all the citizens in America that had loaned for a car in the first three months of this year had FICO scores lower than 680. The ratio is up by 2 percent compared to last year, however still 2 percent lesser than the ratio prior to the recession in 2008. Most of the loans still came from commercial banks.

When the housing industry fell into a flop, the number of subprime mortgage lending has been inexistent. However, loans for cars to people with less than fair credit have continued to be profitable even after the failure of the housing industry.

Customers continue to progress and work hard in paying back every last cent they had borrowed for their car mortgages. Though the sudden increase in the automobile industry still remains a mystery to many analogists, it does prove on thing: subprime lending to cars are safer for money lenders and consumers alike.

Four Tips on How People with Poor Credit Can Get Mortgage Loans

While it is easy for people with good credit to get home loans, those with bad credit find it difficult, especially in conjunction with the present economic situation. For borrowers with bad credit, it can be nearly hopeless to get a home loan, unless you prove to the lenders that you abide by the repayment terms. The following are four tips that will help people with bad credit get home loans.

First, look for the best real estate deal by consulting trustworthy brokers, who will assist you in finding a reasonably priced house you can pay for. Moreover, you must inform the broker about your current credit status so that they can look for the most suitable house that is within your means.

Second, save a sufficient amount of money for a deposit. There are a few lenders who will approve you a loan in spite of a low credit score and if you pay a large deposit, you will be charged with lower interest rates. The higher the deposit you pay, the more chances of getting approved for a loan, and the lower you will have to pay every month.

Third, show off your other assets, especially if you do not have money to pay a large deposit, because it will further convince the loan officers to approve your application. For example, indicating your life insurance with cash value on the home loan application will guarantee lenders that you have another source of money. This will be of great help when the time comes that you cannot pay your mortgage.

Fourth, increase your credit score because having such will make it a lot easier for you to get loans someday and you can also get the loan you want charged at a lower interest rate. One way to increase your credit score is to pay your debts on time.

Although you have a poor credit rating, there are still a lot of online sites that offer inexpensive loans for those with poor credit. However, you must be ready to be charged with high interest rates on the loan because it is a consequence for having a poor credit history.